NVIDIA Corp.
What Happened: The stock's sharp daily decline, if confirmed at the close, would mark the most substantial single-day drop for the prominent chipmaker giant since the end of December 2022.
Per Reuters, the Biden administration has outlined plans to cease the export of more advanced artificial intelligence (AI) chips. That includes exporting chips developed by Nvidia and other companies to China. This action prevents China from gaining access to cutting-edge U.S. technology.
The new regulations will effectively halt the sales of Nvidia's A800 and H800 chips in the Chinese market.
Why It Matters: The rules place restrictions on a broader spectrum of advanced chips and chip manufacturing equipment, extending their reach to countries such as Iran and Russia. Additionally, two undisclosed Chinese firms involved in advanced chip manufacturing will be added to the blacklist.
The notable 6% drop seen in the first hours of trading on Wednesday sent NVIDIA's stock price below the crucial support level of the 50-day moving average.
The last instance of NVIDIA breaching the 50-day moving average occurred on Sept. 15. A maximum drawdown of 10%, culminating in a low of $409 on Sept. 21, followed.
NVIDIA shares had surged by 190% since the beginning of the year. However, they have since receded by 13% from their peak in July, when they reached an all-time high of $502.
What's Next: The Fibonacci retracement for the high-to-low range in 2023 suggests that $417 (23.6%) is the next anticipated support level, followed by $364 (38.2%). The 200-day moving average, which is situated at $339, remains a considerable distance away from serving as a significant short-term support level.
